WHY INDIA IS BANNING CRYPTO?
In the present era, the world economy is unavoidably transitioning towards a virtual and digital ecosystem. Every transaction is marching paperless - transfers, investments or name it! The world market is booming with the effect of crypto. We can call it a decentralized virtual currency that undergoes encryption. A means of payment identical to the conventional currencies like a dollar that additionally is inclusive of digital data exchange. It has signified various boons. One of them is the easy reach out of enterprise to global markets, instead of limitations to the local and domestic ones.
Nevertheless, some countries have passed a restriction on these crypto currencies and the Indian government is also prepared to move through with its vision to put a ban on crypto in an awaited bill. The prohibition is said to be applied to all private cryptos including bitcoins.
CRYPTO FOCUSED BILL
The proposed bill of the regulation of the official crypto currency includes part of the ban. The proposed legislation has the vision to provide a conducive environment for the formation of the virtual currency that can be issued by the Reserve Bank of India (RBI). In the year 2019, a law was introduced called the banning of crypto and regulation of official digital currency. This name is now altered to “Cryptocurrencies and Regulation of Official Digital Currency Bill, 2021”. As per the Indian government, Cryptos can be regulated as an asset rather than a currency along with taxing gains. Moreover, cryptos will not be accepted as a form of payment.
On the other hand, some of the sources such as CNN news18 stated a certain regulatory action will be taken by the Indian government instead of the ban of crypto. This includes trading through government recognized platforms. Moreover, the SEBI will be needed to keep track of the trading, since it involves transactions at global level. Nevertheless, the regulations are yet to be confirmed.
CRYPTO MARKET IMPACT
Following the release of the bill, the value of numerous crypto is said to have gone down. Dogecoin and Bitcoin sank by more than 12% and 14% respectively in one of the Indian exchange sites. The crypt trader’s author states that the impact of this regulation is quite limited.
For instance, when China declared crypto an issue and chose to limit and prohibit its use, the markets were not affected to the same level, but were allowed to operate with some limitations placed. The Indian government is anticipated to follow similar actions that would permit individuals to utilise cryptos under specific situations.
WHAT HAPPENS IF INDIAN GOVERNMENT PUTS A BAN ON CRYPTOS?
There are a large number of people, estimated at around 15 million who have made investments in cryptos in the present year. It is currently growing at a steady rate with a large portion of participants coming from tier 2 and 3 cities of India. People are understanding that cryptos are now much more than just speculative digital currency. They can be a great source of diversification in the portfolios and putting a complete ban on them can undoubtedly be a major setback to the country's economy.
The Indian government is very concerned about the savings of its people and that it might face a loss that would end up affecting the economy. The reason for this is that cryptos are very volatile and tend to fluctuate drastically and are susceptible to manipulations. Nevertheless, there is still a chance that the government will bring legislation allowing the crypto transactions to be continued. And hence, investors will still have a chance.
But at the end of the day, these are just our speculations. Whatever the government brings on the table will be after a lot of research and discussion and it will be ultimately for the best.